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• Tesla announces another stock split
• Tesla stock soars
• Positive news follows stock split announcement
Tesla wants to do another stock split. The US group announced this at the end of March when it said it would let its shareholders vote on this at the next general meeting. At the same time, the electric car maker had filed a follow-up filing with the US Securities and Exchange Commission to expand its articles of incorporation to include an increase in the number of common shares. The new shares will then be distributed to Tesla stockholders in the form of a stock dividend.
Second stock split in two years
It’s not the first time Tesla has taken this step. Just a year and a half ago, Elon Musk’s company decided to book four more Tesla papers into the depot for each shareholder. The background to this decision was the company’s enormously increased share price, which made the share certificates less affordable for investors. The Tesla paper has also recently reached lofty heights again. The paper was able to gain a whopping 54.62 percent within one year and is currently trading at a price of 1,058.63 US dollars, well above the much-noticed 1,000 US dollar mark. In 2020, when the share split was announced, things had gone up even more, at that time the Tesla share certificate had even exceeded 2,000 US dollars. After the split, the stock price ended up around $460. It is not yet known at what ratio Tesla plans to split the shares.
Wedbush analyst Dan Ives takes a positive view of Tesla’s stock split
One who is already convinced that the stock split is a clear sign of the company’s strength is Wedbush Securities analyst Dan Ives. In his opinion, Tesla is currently in a “massive position of strength”, especially with regard to the new factories in Berlin and Austin, but also in terms of general demand, as he told Yahoo Finance.
The Tesla giga factory in Grünheide was officially opened just a few weeks ago. In the first phase, the factory will have 12,000 employees and produce half a million vehicles a year. The first Teslas are already rolling off the assembly line, and as the company says, it takes about ten hours for a Tesla “Made in Germany” to be ready. Just yesterday, the Tesla giga factory in Austin, Texas, was inaugurated with a “Giga Fest”.
Accordingly, Ives sees a lot of momentum at Tesla for the coming months: “Despite all the excitement, despite the current competition, Tesla, at least in EV country, is actually the world at the moment and everyone else is paying for rent.”
Good timing
According to Ives, the announcement of the share split came at a good time, so shortly after the opening of the Berlin factory. In addition, the EV specialist recently set a new delivery record for the first quarter of 2022: the company was able to deliver 310,048 vehicles in the first three months of the year, 1,500 more electric vehicles than in the previous year.
Nevertheless, the Wedbush strategist does not believe that market participants would now only reach for Tesla shares because of the stock split: “You don’t buy it because of a stock split. You buy it because you fundamentally believe in where it is going. But the stock split will be kind of a catalyst. It’s been rumored about it for the last four or five months. I think it was smart to announce it now.”
sign of strength
In general, it is a “luxury problem” for Tesla to have a four-digit share price. Two stock splits within two years are not a sign of weakness, but on the contrary of “strength, confidence”. While a stock split decision is always open to debate, such a decision is “a smart strategic move for Tesla, just as it has been for Amazon, as it has been for Google and Apple,” Ives told Yahoo Finance.
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